Temporary workers are a key part of the business strategy for many accountancy and finance employers, and their use is no longer limited to supporting busy tax and financial year-end periods.
Continued regulatory change is one factor driving the higher demand for temps. For example, implementation of auto-enrolment and the apprenticeship levy have driven the need for temporary payroll professionals to assist existing teams with additional workload. In addition to ongoing technology projects, widespread mergers, acquisitions or disposals are causing qualified accountancy temps to be highly sought after, to implement and manage business change.
However, the introduction of updated IR35 legislation in April 2017 in the public sector created challenges for many when it came to hiring temporary workers. The updated legislation impacts interims working under a personal service company (PSC) and shifts the responsibility for determining whether a PSC employee is inside or outside of scope of IR35 legislation to the hiring organisation. This brings with it liability for tax and national insurance contributions.
Short timeframes between the finalisation of the changes and the implementation date caused problems for many public sector organisations left with little preparation time to become compliant. This caused many to implement blanket in scope determinations for PSC workers rather than applying the new rules on an individual basis as the legislation change intends, causing impacts to costs, time and the availability of skills.
Impact on accountancy and finance employers
The fallout has affected many public sector organisations, including accountancy and finance teams. Results of a recent Hays survey show that nearly a quarter (23%) of contractors who have been affected by in scope determinations now seek a higher rate from hiring organisations to counter increased tax liabilities. Of the public sector employers who have been affected, 78% have found it harder to attract skilled temporary or contract workers since the changes came into effect.
this In the Autumn 2018 budget, it was confirmed that changes to the IR35 legislation would be extended to the private sector in April 2020, for large and medium-sized organisations. However, over half (57%) of private sector employers are unsure if their organisation has begun to prepare for these legislation changes. Of those who have started preparing, less than half (43%) have carried out an audit of their PSC workforce, and nearly a fifth (17%) plan to apply a blanket in scope determination for all PSC workers. This apparent lack of preparation runs the risk of repeating the challenges faced by the public sector, rather than ensuring the smooth transition that proactivity can bring.
How can the private sector prepare?
1. Don’t delay preparation. Updates to IR35 need not change the way your organisation utilises interim workers as long as you take the time sooner rather than later to prepare your strategy. This will ensure your organisation is able to access and compete for the temporary accountancy and finance skills you need to undertake change and complete projects in a time and cost effective manner.
2. Undertake a risk assessment. Audit your interim workforce to ascertain your level of risk. A recruitment expert who has supported the public sector through the original implementation date can undertake a health-check to determine how IR35 changes may affect your organisation, and help develop a solution if required.
3. Consider your long-term strategy. Once a strategy is in place, ensure you maintain visibility of your interim workforce going forward to be aware of any changes to the manner in which you utilise your workforce which may affect whether a contractor remains inside or outside of IR35 determination.